The field survey of foreign direct investment (FDI) in the Emirate of Dubai aims to establish an accurate database on the

value of FDI to prepare economic indicators. The result will be used to study the effect FDI contributes to the development and progress of the economy, prepare economic and social development plans, and to meet the needs of researchers and analysts. The results of the survey indicated that the value of foreign investment in the Emirate of Dubai increased by 13.4% in 2006 comparing with 2005, it moved from 37.4 billion Dirhams in 2005 to 42.5 billion Dirhams in 2006. This increase indicates the success of the policy to attract FDI and the position of Dubai as an attractive centre for this investments. The rate of increase has varied between economic activities as shown in Table (1) below.

Table No. (1) FOREIGN DIRECT INVESTMENT BY ECONOMIC ACTIVITIES (Value in Million AED) Main Sector Agriculture Mining Manufacturing Electricity And Water Construction Wholesale and Retail Trade Hotels and Restaurants Transportation and Communication Financial Intermediation & Insurance Others Total 2005
16 1,098 737 39 13,239 7,939 3 603 12,931 830 37,435

2006
13 1,302 1,061 46 14,652 8,696 38 851 15,025 780 42,463

% change
-20.0% 18.6% 43.9% 19.9% 10.7% 9.5% 1,054.7% 41.0% 16.2% -6.1% 13.4%

The share of foreign direct investment in construction shows that foreign direct investment is high in urban development. In addition of its role as a trade center in the region, which contributed to attracting more direct investments in financial and trade sectors, the urban development and the increased in demand of real estate have contributed in the increased flow of foreign direct investments in construction activity. The data indicate that European direct investments ranked as the first among total foreign direct investments in Dubai: the value of these investments was around 15.0 billion Dirham in 2005 raised to around 19.0 Dirham in 2006. The European direct investment (about 80.0% of the total) was mainly from the UK which billion contributes about 44.9 % of total FDI in Dubai. The EU was followed by the non-Arab Asian countries where FDI increased from 16.0 billion Dirham in 2005 to 17.5 billion Dirham in 2006. The table below shows the value in Dubai distributed by the worlds regions: Through this data we can note that the FDI of European of FDI and non-Arab Asian countries formed 82.7% and 86.2% respectively of total FDI in Dubai (in 2005, 2006).

Table No. (2) FOREIGN DIRECT INVESTMENT IN DUBAI BY SOURCE OF INVESTMENT (Value in Million AED) Origin of Investment GCC Countries Other Arab Countries Non - Arab Asia Countries Europe North And South America Oceania Others Total 2005 979 516 16,169 14,798 4,274 592 107 37,435 2006 1,208 565 17,569 19,047 3,034 911 129 42,463 % change 23.4% 9.6% 8.7% 28.7% -29.0% 53.9% 21.3% 13.4%

18000 15,025 2005 2006

16000

14,652 13,239

14000

12,931

12000 (Value in Million AED) 10000 8,696 7,939 8000

6000

4000 1,302 1,098 737 16 13

A griculture M ining M anufacturing

2000

1,061 603 39 46
E lectricity A nd W ater C ons truction W holes ale and R etail T rade

851

830 780

38
T rans portationF inancial andIntermediation C ommunication& Ins urance Others

Hotels and R es taurants

The distribution of FDI over economic activities in 2006 was similar to that of 2005. As seen in the above diagram the value of FDI in construction and financial intermediation & insurance constituted the highest level of investment in both years, while agriculture, electricity & water, and hotels & restaurants were the least in 2005, 2006. This indicates that the activities that were more attractive for foreign direct investment in 2005 remained the same in 2006. The following diagram shows that financial intermediation & insurance was the most attractive activity for foreign direct investments, which contributed about 35.4% of total Dubai FDI in 2006. The second activity was construction with 34.5% and then wholesale and retail trade with 20.5%.

0.03% 1.84% 35.38% 3.07%

2.50%

0.11% 34.50%

2.00%

0.09%

20.48% Mining Electricity And Water Wholesale and Retail Trade Transportation and Communication Others

Agriculture Manufacturing Construction Hotels and Restaurants Financial Intermediation & Insurance

Table No. (3) FOREIGN DIRECT INVESTMENT IN DUBAI BY COUNTRIES (Value in Million AED) Country United Kingdom Japan India USA Holland North Korea Iran Switzerland Iceland Turkey Others Total 2005 11,543 8,725 4,173 3,933 1,532 699 1,062 831 551 814 3,573 37,435 2006 15,253 9,160 4,135 2,669 1,553 1,255 1,068 903 867 830 4,772 42,463 % change 32.1% 5.0% -0.9% -32.1% 1.3% 79.5% 0.6% 8.6% 57.4% 2.0% 33.6% 13.4%

The United Kingdom had the highest foreign direct investment in Dubai, contributing 35.9% followed by Japan with 21.6% and then by India with 9.7% and the United States of America with 6.3% of the total foreign direct investments in Dubai. The following chart shows the relative distribution of FDI in Dubai by country of source.
2.5% 2.1% 2.0%

6.3% 9.7%

3.7%

3.0%

2.0% 11.2%

21.6%

35.9%

United Kingdom Holland Iceland

Japan North Korea Turkey

India Iran Others

USA Sw itzerland

Sales of goods and services of FDI companies amounted to about 56.0 billion Dirham in 2006, and increase by

The following chart shows the relative distribution of FDI in Dubai, according to the regions of the world in 2006 which showed that the total direct investments of the Arab states are not more than 4.2% of the total foreign direct investments, of which GCC countries formed 2.84% of the total direct investment, and the Arab countries formed around 1.33% only. other

0.3% 2.8%2.1% 7.1%

1.3% 41.4%

44.9%

GCC Countries Europe Others

Other Arab Countries North And South America

Non - Arab Asia Countries Oceania

The survey results also showed the distribution of these investments by countries as a source of investment .The following table shows that the direct investments of North Korea, Iceland and the United Kingdom in Dubai rose significantly in 2006 over 2005, while the direct investments of the United States dropped by a high percentage 32.1 %.

5.2% in comparison to 2005, while purchases of goods and services increased by 21.7%. The following table shows some indicators of FDI companies in Dubai and the changes in these indicators between 2005 and Those 2006. companies employed 70,445 employees in 2006 which was an increase of 24.8% from 2005; receives billion Dirham as salaries and benefits in 2006 compared with 2.6 billion Dirham in 2005. The about 3.6 income of foreign direct investors reached 12.5 billion Dirham in 2006 compared with approximately 8.6 billion in 2005, of which dividend payments were about 1.7 and 2.4 billion Dirham in 2005 and 2006 respectively; Dirham the rest was income payments from companies to investors. This means that the returns on foreign direct investment in Dubai increased from 22.9% in 2005 to 29.4% in 2006. Table No (4): SOME INDICATORS OF FOREIGN DIRECT INVESTMENT COMPANIES IN DUBAI (Value in Million AED) MAIN SECTOR Foreign Direct Investment Dividend Payments Income Payments Sales Of Goods And Services Purchases of Goods And Services No. of Employees Compensation Of Employees 2005 37,435 1,738 6,835 53,054 32,378 56,430 2,601 2006 42,463 2,394 10,085 55,2822 39,400 70,445 3,636 % change 13.4% 37.7% 47.6% 5.2% 21.7% 24.8% 39.8%